By Tripp Mickle
Tobacco companies Reynolds American Inc. and Lorillard Inc. said
Friday they will put their proposed $25 billion merger up for
shareholder votes Jan. 28.
Closing the deal remains contingent on the Federal Trade
Commission, which continues its antitrust review. The companies
expect a ruling in the first half of next year.
Shareholders are being asked to vote on a cash-and-stock deal
combining U.S. industry No. 2 Reynolds and No. 3 Lorillard to
create a stronger rival to industry leader Altria Group Inc., maker
of Marlboro cigarettes. The transaction would add Lorillard's
Newport, the No. 2 U.S. cigarette brand, and to Reynolds's
portfolio of Camel and Pall Mall cigarettes.
To address potential antitrust concerns, Reynolds and Lorillard
plan to sell the Kool, Maverick, Salem and Winston cigarette brands
and Blu e-cigarette brand to Imperial Tobacco Group for $7.1
billion. The planned divestitures would turn Imperial into the No.
3 player in the U.S. market, in terms of revenue.
Reynolds and Lorillard shareholders in January will vote on the
current merger agreement. If the current agreement changes as a
result of the FTC evaluation, then the companies would need to
draft a new agreement and have shareholders vote on the new
terms.
Reynolds's vote will take place at its corporate offices in
Winston-Salem, N.C. Lorillard's vote will take place in Charlotte,
N.C.
The two companies announced the proposed tie-up in July.
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